Indices Updates by Solid ECN

[SOLIDECN]

BREAKING: German IFO Data Meets Estimates, DE30 Muted​

German IFO Institute published the latest survey data for February today at 9:00 am GMT. Data came in mostly in-line with market expectations with headline Business Climate index reaching 91.1 (exp. 91.2). Current conditions subindex missed estimates by quite a big margin while Expectations subindex turned out to be slightly better than expected. However, as scale of deviations from median estimates was small, there were no major reactions on the market. EURUSD ticked lower while DE30 was flat following the release.​

• IFO Business Climate index for February: 91.1 vs 91.2 expected (90.2 previously)​
• Expectations: 88.5 vs 88.4 expected (86.4 previously)​
• Current Conditions: 93.9 vs 95.0 expected (94.1 previously)​

DE30 barely saw any reaction to in-line IFO data. Index continues to trade near 15,300 pts price zone, that has limited recent downward moves.​

 

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US500 Fell Slightly after Minutes​

Markets unimpressed by latest FOMC minutes

Minutes from the latest FOMC meeting were hawkish but investors were expecting this narrative. The document did not present many new information regarding further steps that the FED intends to take regarding fiscal policy. Almost all FOMC participants agreed that it was appropriate to raise the target range for the federal funds rate by 25bps at the first monetary policy meeting of 2023, although a few officials favored raising it by 50bps. Minutes release taking into account hawkish tone led to small pullback on equity markets and appreciation of USD dollar.

Below you can find key takeaways from the document:​

• A few participants favored raising rates by 50 basis points​
• Several participants advocated raising interest rates by 50 basis points.​
• Some participants predicted an increase in the likelihood of a recession in 2023.​
• Participants stated that the continued tight job market would contribute upward pressure to inflation.​
• Participants said that inflation in last three months has eased, but they need to see more progress.​
• All participants agreed more rate hikes needed to achieve federal open market committee's job, inflation objectives.​
• Upside risks for inflation, including China's economic reopening and Russia's war in Ukraine.​

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US500 pulled back slightly after today's Minutes, however continues to trade above major support at 4000 pts.​

 

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US100​

• Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei dropped 0.1%, S&P/ASX 200 traded 1.1% lower, Kospi slumped 0.9% and Nifty 50 moved 0.8% lower. Indices from China traded 0.2-0.8% lower​
• DAX futures point to a slightly higher opening of the European cash session​
• US index futures little changed compared to Friday closing prices​
• UK prime minister Sunak is set to meet with EC President von der Leyen today to discuss the Brexit deal (Northern Ireland protocol). UK deputy PM Raab said that great progress has been made and that long-standing issue is close to be solved​
• ECB President Lagarde said that a 50 bp rate hike at the March meeting is not certain and remains data-dependent. ECB Visco said that peak rate could be 3.75% but it remains data-dependant​
• BoJ Governor nominee Ueda said that CPI growth will slow below 2% in fiscal-2023 but it will take time for the 2% target to be met sustainably and stably. He also said that current monetary easing conducted by Bank of Japan is appropriate​
• Conway, RBNZ chief economist, expects New Zealand official cash rate to peak around 5.5% around the middle of the year (4.75% currently)​
• Russia halted pipeline oil deliveries to Polish refiner PKN Orlen over the weekend​
• New Zealand retail sales dropped 0.6% QoQ in Q4 2022​
• Australian business inventories dropped 0.2% QoQ in Q4 2022 (exp. 0.0% QoQ)​
• Cryptocurrencies trade lower - Bitcoin drops 0.3%, Dogecoin trades 0.7% lower while Litecoin pulls back 0.4%. Ethereum gains 0.1%​
• Energy commodities trade mixed at the beginning of a new week - oil drops 0.9% while US natural gas prices jump 1.4%​
• Precious metals pull back slightly amid USD strengthening - gold trades 0.1% lower, silver drops 0.2% and platinum pulls back 0.5%​
• USD and EUR are the best performing major currencies while NZD and AUD lag the most​

Nasdaq-100 futures (US100) climbed back above the 12,000 pts mark but some selling pressure appeared as the European trading drew close and another pull back cannot be ruled out.​

 

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Nasdaq 100 - the bond market puts pressure on the asset​

Against the background of growth in the bond market, one of the leading US indices Nasdaq 100 is correcting at 12053, and even financial reports are not able to significantly affect its dynamics.

The popular conferencing platform Zoom Video Communications Inc. released data yesterday, and although the peak periods for the company are behind, it shows stable growth: revenue was $1.12B dollars, up from $1.1B dollars a quarter earlier, and profit per share reached $1.22 dollars, up from $1.07 dollars previously.

The stock market is under pressure from the bond market, with popular 10-year yields hitting 3.9340% and up 0.55% today, conservative 20-year yields well above the 4.0% threshold, up 0.30% to 4.123%, and global 30-year bonds are at 3.928%, which covers the cost of 30-year mortgage loans by more than 60.0%, which is an undeniable advantage compared to risky investment assets.

On the daily chart, the trading instrument is correcting within the global Expanding formation pattern, declining towards the support line, and technical indicators gave a sell signal.

Resistance levels: 12300, 12900 | Support levels: 11900, 11200​

 

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Dow Jones​

Volatility in the US stock market increased again, reaching its peak in trading on Friday against the background of the rhetoric of a number of experts regarding possible actions by the US Federal Reserve at a meeting on March 22. The President of the Federal Reserve Bank (FRB) of Atlanta, Rafael Bostic, said that the regulator is ready for a sharper increase in the cost of borrowing than previously planned. The official's words led to a change in the balance of opinion in futures on the expected interest rate: the probability of an increase in value by 50 basis points is now estimated at 28.4% after 25% at the end of last week.

In turn, the bond market on Friday updated all-time highs: the yield on 10-year Treasuries exceeded 4% for the first time since November last year, but then a correction followed and now the figure is held at 3.944%, which contributed to the positive dynamics in the stock market. Today, auctions are scheduled for the placement of 3- and 6-month treasury bills, which may also have an impact on the stock index quotes.

On the daily chart, the index quotes continue their corrective dynamics, being in the middle of the local downward channel, and the technical indicators are ready for a reversal and have almost given a new buy signal.

Support levels: 33000, 32000 | Resistance levels: 33700, 34600​

 

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DE30​

European stock market indices trade higher for another day in a row. This comes in spite of a rather mixed Wall Street session yesterday and a mixed trading during the Asian session today. There is no clear reason behind the move but ECB consumer survey for January may play a role. Survey suggested that consumer inflation expectations for the next 12-months dropped from 5 to 4.9% while three-year expectations dropped from 3 to 2.5%. Moreover, growth in nominal income over the next 12 months is seen at 1.3%, up from 1.0% seen in December. This suggests that ECB could have room to be less hawkish. Nevertheless, this stands in contrast to recent comments from ECB members themselves, like for example Holzmann, who sees need for 4 more 50 bp rate hikes.

Taking a look at DE30 chart at D1 interval, we can see that the index moved above a recent trading range and is making a break above the local high from early-February in the 15,700 pts area. A quick and clear break above the 15,700 pts handle may pave the way for extension of the upward impulse, and a move towards all-time highs in the 16,300 pts area.​

 

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US500​

Wall Street indices took a hit yesterday after Powell struck a hawkish note during semi-annual hearings before the Senate Banking Committee. Fed Chair hinted that the pace of rate hikes may accelerate back to 50 basis points if economic developments warrant it. Yields and US dollar caught a bid while S&P 500 plunged 1.53% and moved below the 4,000 pts mark. However, an attempt to climb back above this hurdle can be spotted on the S&P 500 futures market today (US500).

Fed Chair Powell is set to appear on Capitol Hill today for the second day of hearings but as text of the speech will remain unchanged from yesterday, this may not be as big of a volatility event as yesterday. However, traders will be offered ADP employment report for February 2023 today at 1:15 pm GMT and it will be a final hint ahead of Friday's NFP report for February. Market expects ADP report to show a jobs gain of 200k, down from +106k signaled by API for January but also significantly below +517k shown by NFP report for January. A point to note is that US CPI report for February will be released on Tuesday next week and those 2 pieces of data (jobs report and inflation data) are likely to be key for the upcoming FOMC decision (March 22, 2023). Currently money markets price in around 40 basis points of tightening for the meeting and strong jobs report compared with still-high inflation could see those move even closer to 50 basis points.

Taking a look at S&P 500 futures chart (US500) at the H1 interval, we can see that the index took a big hit yesterday following Powell's hearings at Congress. Drop was halted at the 3,985 pts short-term support zone and an attempt to launch a recovery move can be spotted today. Index made an attempt at breaking above the 4,000 pts resistance zone, marked with previous price reactions as well as 200-hour moving average (purple line), but bulls were unable to break above. While the first attempt failed, index remains nearby and another attempt cannot be ruled out, especially if ADP data comes in softer than expected.​

 

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DE30​

European indices launched today's trading little changed after Fed and US Treasury stepped in to limit contagion risk from SVB collapse. However, issues may not be over as SVB is not the only bank with problems. Signature Bank has been shut down by regulators over the weekend due to systemic risk concerns. Meanwhile, another US bank may be facing collapse - First Republic Bank. This bank is trading 60% lower in US premarket session right now and it has dented moods on the markets following European cash session open.

German DAX slumped around 200 points during the first hour of the cash trading session. Index erased all of the overnight gains, dropped to the lowest level since March 2, 2023 and is now attempting to break below the 15,230 pts support zone at press time.​

 

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US500​

Concerns over the condition of the banking sector triggered a sell-off on the global stock markets this week and now investors hope that FED will ease its hawkish rhetoric at a meeting scheduled for next week.. We will get to know what Fed's response is the coming Wednesday at 6:00 pm GMT. However, rate decisions from the Bank of England and Swiss National Bank will also draw attention, and so will flash PMIs for September from Europe and US. Be sure to watch US500, DE30 and GBPCHF next week!
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US500​

FOMC rate decision is a key event of the week. The market anticipates the Fed will hike rates by just 25 basis points, in light of easing inflationary pressures and the recent banking turmoil. However, some expect that the central bank can reverse course if the financial system is in distress. We will see whether those expectations are met on Wednesday, 6:00 pm GMT and any deviation away from a 25 bp move could potentially trigger additional volatility on the markets. The meeting will also be closely watched as a new set of economic forecasts will be provided.
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DE30​

While central banks will draw the most attention next week, release of flash PMI indices for March may also trigger a jump in volatility. German manufacturing and services indices are expected to rise slightly compared to February releases and weaker-than-expected print could provide some fuel for DE30 bulls. As usual, focus in Europe will be primarily on releases from France (Friday, 8:15 am GMT) and Germany (8:30 am GMT).​

 

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DE30​

European indices had a poor start to a new week with major indices from the Old Continent launching today's cash trading session with significant bearish price gaps. This came after a government-brokered deal for UBS to acquire Credit Suisse failed to shore up market sentiment. Issue of Credit Suisse's AT1 bonds being written down to zero sparked concerns that it may be a problem for banks and financial institutions with exposure to those bonds. However, indices began to regain ground as the session progressed and all of the earlier losses have been erased already. Indices from Western Europe trade 0.5-1.0% higher on the day with German DAX adding 0.7% and French CAC40 jumping 0.9%.

Taking a look at the DE30 chart at H4 interval, we can see that another attempt at breaking below the 14,750 pts support zone was made today and once again it turned out to be a failure. Index caught a bid later on and rallied towards the psychological 15,000 pts mark. While the index managed to break above this hurdle, bulls failed to break above the 15,050 pts swing area. However, the index remains close to this resistance and another attempt to break above it later into the day cannot be ruled out.​

 

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US30​

• European indices erased early losses and finished today's session higher, with Dax up 1.12% as investors continued to monitor risks to the European banking sector. Credit Suisse was purchased by its competitor UBS, and global central banks' took several actions to boost dollar liquidity.​
• ECB President Lagarde said that Eurozone banks have capital and liquidity levels well beyond their requirements. Without the tensions, policymakers would have indicated that additional hikes were required.​
• The government of French President Emmanuel Macron survived a no-confidence vote by nine votes​
• The Dow Jones and the S&P 500 gain 0.9% and 0.75% respectively while the Nasdaq is trading around the flatline despite lingering risks of the banking crisis. Traders now await the highly-anticipated 2-day FOMC meeting to kick off tomorrow.​
• First Republic Bank stock plunged 40.0%, extending recent heavy losses, after S&P downgraded the bank deeper into junk status and said the recent $30 billion cash infusion may not be enough to solve its liquidity problems. Buyers managed to erase some losses on news that JPMorgan Chase is advising First Republic Bank on strategic alternatives, one of which is capital raise which could dilute current shareholders. A sale of the bank is also taken into consideration.​
• OIL.WTI briefly dropped to $64.50 which was the lowest level since early December 2021, only to erase all of the losses in the evening as moods improved a bit. Natgas price fell 5.0% and is testing support at $2.22 as average US gas demand, including exports, is expected to fall to 108 bcfd this week from 116.9 bcfd last week due to milder weather.​
• Precious metals are trading higher amid a lower dollar. Gold jumped to one-year high at $2012 at the beginning of European trading as Credit Suisse bond write down fueled demand for safe haven assets. However almost all of the gains have been reversed later in the session. Silver pulled back from local resistance at $22.70.​
• The winner of today's FX session is the British pound, which strengthened over 0.8% against the dollar. GBPUSD pair managed to break above February 14 highs and now oscillate above the 1.2270 level.​
• The dollar index dropped below 103.5, extending losses for the 3rd session as investors anticipate that the Fed might not hike rates as much as previously thought because of the banking crises. Not long ago, a 50 bp hike was expected, while currently markets expect at 25 bp hike or even a pause of the tightening process.​
• Bitcoin pulled back from 9-month high at $28,500 and is currently testing local support at $28000. Nevertheless recent turmoil of the banking sector supports digital assets and as long as current sentiment prevails crypto bulls seem to have an advantage. The key support for the most popular cryptocurrency is located around the $25,000 mark and only a break below would point to resumption of downward move.​

USDJPY currency pair has been moving in a downtrend recently. Looking at the H1 interval, buyers launched a small upward correction. If the bullish momentum gains steam, EMA100 (blue line) should be treated as the nearest resistance. In case of break higher, upward impulse may accelerate towards crucial resistance around 133.30, which is marked with the upper limit of the 1:1 structure and 38.2% Fibonacci retracement.​

 

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FRA40 pulls back as investors continue to follow the banking turmoil​

FRA40 and other major European indices gave back most of early gains in the afternoon amid renewed concerns over the European banking sector. French prosecutors raided five banks including Societe Generale, BNP Paribas and HSBC as part of an investigation into suspected cases of tax fraud and money laundering related to dividend payments. Meanwhile, protests against the pension reform continue and strikes entered a 10th day on Tuesday, with public transport disrupted and deliveries halted. From a technical point of view, the French index pulled back as buyers failed to break above 50 SMA (green line) around 7180 pts. If sellers manage to uphold control, downward move may deepen towards upward trendline or even crucial support zone in the region 6550 pts - 6650 pts, which is marked with lower limit of the 1:1 structure, 200 SMA (red line) and 23.6% Fibonacci retracement of the upward wave launched in March 2020.

 

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CHNCComp - Chart of the Day​

HSCEI (CHNComp) was one of the best performing Asian indices during today's Asia-Pacific trading session. The index jumped over 2% today and painted a daily peak at 3-week high. Improved sentiment towards Chinese shares can be reasoned with recent performance of Alibaba (BABA.US) as the index and the stock are highly correlated. According to a Bloomberg report, Alibaba aims to divide the company into 6 different entities with each being responsible for its own financing and decisions like going public. This news triggered an over-14% increase in Alibaba's share price yesterday.

Taking a look at CHNComp chart at D1 interval, we can see that while the index managed to climb above the price zone ranging between 6,600 pts mark and 200-session moving average (purple line), it was later halted at 50-session moving average (green line) in the 7,000 pts area. What comes next will be crucial from a technical point of view. An inverse head and shoulders pattern can be spotted building up on the chart - a bullish pattern. However, a pullback towards the aforementioned 6,600 pts area would be needed for the pattern to take shape.​

 

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DE30​

German retail sales data for February was released today at 7:00 am BST. Report was expected to show a 0.5% MoM increase as well as 5.1% YoY drop in retail sales. However, actual data turned out to be much worse than expected with monthly data showing a 1.3% drop and annual data showing 7.0% YoY plunge. DE30 ticked lower following the release while EURUSD saw a minor uptick.

DE30 dipped after miss in German retail sales.​

 

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Morning Wrap - TNOTE​

• Wall Street indices ended yesterday's session mostly lower. Investor sentiment was weighed down primarily by macro data readings and comments from the Fed's Mester, which point to a slowdown in the US economy.​
• The S&P 500 fell 0.25%, the Dow Jones gained 0.24% and the Russell 2000 small-cap index lost 0.99%. The Nasdaq index of technology companies was the weakest performer, losing 1.07%.​
• With the specter of a global recession widening, US 10-year government bond yields are under particular scrutiny by investors, having fallen to their lowest level since September 2022 (3.29% zone). Currently, the money market sees a 48% chance of a 25 basis point hike by the Fed at its May meeting and a 52% chance of keeping rates unchanged.​
• Asia-Pacific indices traded mostly lower - the Nikkei fell 1.3%, the S&P/ASX 200 lost 0.4%, the Kospi lost 1.32% and the Nifty 50 traded 0.15% higher.​
• In the FX market, we are seeing capital outflows to safe haven currencies, i.e. the US dollar and the Japanese yen, among others. The EURUSD pair is recording slight declines and breaking out below the support zone at 1.09. At the moment, pairs linked to the currencies of the antipodes are recording the biggest declines.​
• China plans to cut tax burdens and fees totaling CNY1.8 billion for the corporate sector.​
• China's Caixin PMI index for services recorded an increase and came in at 57.8 (55 was expected, previously it was 55).​
• Former BOJ banker Kazuo Momma commented that the Yield Curve Control mechanism may be terminated this month.​
• China may ban exports of technology used to produce high-performance rare earth magnets.​
• Energy commodities are posting moderate declines this morning. WTI crude oil is losing 0.5%, while natural gas is down 0.4%.​
• Gold is slightly decelerating from its recent upward impulse and is currently consolidating in a zone near 2013 USD. UBS raised its target price for gold at the end of March (2024) to $2200 (previously $2100)​
• There is mixed sentiment in the cryptocurrency market. Bitcoin is currently losing nearly 0.5%, while Ethereum is down 1.16%. On the other hand, smaller projects such as Maker and Iota are gaining more than 3.5%.​

Weak macroeconomic data and in-between comments from Fed bankers, which indicate that given the high economic and systemic uncertainty, the rate hike cycle may be coming to an end, are bolstering sentiment in the debt market.​

 

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US500​

• The probability of an interest rate hike by the Fed in May increases after Friday's good data from the US labor market​
• The key data for the markets this week will be the CPI inflation release for March in the US​
• US banks will start earnings season with financial reports releases rom Q1 on Friday​

US indices opened lower after a longer weekend which started on Friday in the US. Despite most markets being closed today, US trading run as normal. Stocks in the US decreases after good Friday's data from the US labor market which increases the likelihood of an interest rate hike in the US in May. Currently, the probability of a 25 bp rate hike is estimated at 70%. From the perspective of May's rate hike, the key will be inflation data which will be released on Wednesday. Inflation is expected to fall to 5.2% y/y from 6.0% y/y. On the other hand, core inflation is expected to increase to 5.6%YoY from 5.5%YoY.​

 

[SOLIDECN]

US500​

US500 trades slightly lower ahead of US retail sales print but remains close to recent local highs. Meanwhile, TNOTE averts drop (inverted axis), which hints that a potential negative reaction on US500 is looming. Of course, should retail sales data surprise to the upside, index futures should see positive reaction as it would hint that the US economy is not in recession, at least not yet.

 

[SOLIDECN]

German index breaks above 16 000 pts for the first time in 15 months​

New week on the global financial markets began in upbeat moods with indices from Asia-Pacific, especially China, trading higher today. European futures also traded higher throughout the Asian session but have caught an additional bid after opening of the European cash session. German DAX (DE30) is trading 0.5% higher and trades above the 16,000 pts mark for the first time in 15-months! The next resistance zone in-line is marked with all-time highs in the area ranging below 16,300 pts mark - less than 2% above current market price.

 

[SOLIDECN]

DE30​

The German leading index is coming under increasing pressure.
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W1 chart​

The DAX future / DE30 is falling today, pulling back from the high for the year, which was reached yesterday at 16,056 points. The record high remains the key resistance - the gap is around 400 points. In case of further losses, the breakout level at 15,698 points and the intermediate high at 15,463 points could be targeted.

The German leading index is coming under increasing pressure.

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M15 chart​

The DAX future / DE30 slipped below the low at 15,901 points, falling to its lowest level in six days. The technical situation has deteriorated in pre-market trading today - see crossover and lower lows and lower highs. With no sign of life from the bulls, the index remains vulnerable to further losses.
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[SOLIDECN]

US500​

• Wall Street opens slightly lower​
• Regional activity in US is shrinking​
• Goldman Sachs express its favorable outlook to energy companies​
• Bed Bath & Beyond (BBBY.US) filed for Chapter 11 bankruptcy over the weekend​

On the first day of the week, Wall Street opens slightly lower as investors await corporate earnings reports from major tech companies like Alphabet, Microsoft, Amazon and Meta Patforms. Important macroeconomic data are also released this week, such as US GDP, PCE and continuation of regional activity indicators in the US.

Today there are not many publications in the macro calendar, but it is worth paying attention to two regional indices from the US. This morning Chicago index was published - index remains unchanged at -0.19 points. This is a worsening outlook compared to the beginning of the year, but still stable compared to the previous reading. At 15:30 BST Dallas index will be published which may further confirm trends in the US regional economy. This could be another argument that the Fed may end interest rate hikes in May.

Worsening macro situation and the highest recession expectations in this cycle did not prevent the experts from Goldman Sachs from recommending energy and mining stocks for cyclical exposure. Strategist David Kostin said miners are levered to China's growth through rising metals prices. And the green transition and higher domestic infrastructure spending will be tailwinds. Energy remains Goldman's preferred cyclical overweight as it trades at a discounted valuation, while oil should rise to $100 in the next 12 months.​